Daily Market Update

Kazakhstan adds to global soup of issues, aids buck

January 07, 2022

The U.S. Dollar is moving in mixed ranges, moving most against commodity-based currencies as energy costs fluctuate and the globe watches for the situation in Kazakhstan.

Overview

Russia’s Prime Minister Vladimir Putin sent military help to Kazakh President Kassym-Jomart Tokayev in order to quell ongoing protests that had escalated to a takeover of the main airport in capital Nur-Sultan.The intervention adds to concerns that Putin is increasing his reach across the region and is exercising aggressive tactics to influence how other nations run their governments. Naturally, this has led to some safe-haven action for the dollar, also feeding off of expectations of Fed tightening and a dwindling stock market. Bitcoin also joins the decline, now trading at 40.0% below its record.ADP Employment reported the addition of many private payrolls, but the official Non-Farm Payrolls figure for December came in at less than half of jobs expected at 199K vs. 450K expected. While the Fed seems ready to tighten, this suggests that perhaps the economy is near full employment.

Furthermore, Average Hourly Earnings climbed for the month, which could lead to stronger messaging from Fed officials later about the need to taper. We see a divergence between global central banks and that seems to primarily benefit the buck for now.

 

What to Watch Today…

  • No major economic events are scheduled for today

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EUR

The Euro has failed to gain or lose much ground this week as traders are trying to determine if the European Central Bank will indeed continue on its path of wait-and-see before tightening. Stimulus from the Pandemic Emergency Purchasing Program (PEPP) is likely coming to an end, but we wonder if inflationary pressures will force any change in stance.

Consumer Price Index figures revealed a 5.0% increase in prices from a year ago, which only adds pressure for the ECB to consider their decisions. We shall see if Russia’s activities will affect the shared currency as well.

 

GBP

Sterling appreciated slightly as the U.K. continues to battle the pandemic, but unlike other countries, it decided not to increase any safety measures. Another factor keeping the Pound afloat is the December Purchasing Managers Index expansion coming in better than expected. We shall see if the currency can survive the economic toll of the new variant and if relief is actually not far from sight.

 

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